A former chief economist at the International Monetary Fund (IMF), Kenneth Rogoff has said that a global carbon tax or an international emissions trading system is crucial to solving the global climate problem.
Rogoff made this known in an interview where he also spoke about degrowth policies which advocates are proposing a move away from economic expansion because it requires constant use of energy and resources, causing harm to the environment.
According to him, the whole degrowth movement is not a solution and the idea of economies developing a little less fast is not going to do “any good.”
“That’s just nothing on the margin. And if you want to tell India and China and Africa never to grow again, that would make a big difference, but that’s not honest,” he said.
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Arguing that countries should apply a carbon tax instead of pursuing degrowth policies, Rogoff said: “You need a carbon tax, and I don’t think the kind of industrial policy that the Biden administration (in the US) is doing is a solution either. It does some good, but it’s just not nearly enough.”
In 2022, the US introduced a landmark legislation called the Inflation Reduction Act, which lays out ambitious targets such as cutting the deficit to curb inflation, investing in cleaner energy, and slashing carbon emissions by roughly 40% by 2030.
However, the US has so far refrained from introducing a carbon tax at a national level despite being one of the world’s biggest carbon emitters.
As part of his objections to the degrowth theory, Rogoff mentioned the difficulty in measuring the effects of carbon emissions.
“If you look at how much emissions are going up, you’re just not even able to see the effects of that. I think just saying that we have a recession there … and we’re not having as much pollution is missing the main point. So it means it takes a year longer or a month longer for the temperature to rise. It’s not really solving the problem,” he explained.
Economists have purported to the idea that nations can cut their emissions and grow their economies at the same time by relying on more nature-friendly technologies such as renewable energy.
However, Rogoff believes that a carbon tax is the only way to encourage businesses to cut emissions and can actually be an effective solution to the problem of climate change.
Adapted from AA.
